What is Considered Full Retirement Age in the USA?16 min read

Jun 15, 2021 12 min

What is Considered Full Retirement Age in the USA?16 min read

Reading Time: 12 minutes

Data from the US Census Bureau shows that the average retirement age for men and women in the United States is 65 and 63, respectively. Retirement at any of these ages can be favorable for you if you have planned efficiently and if factors are on your side.

Your retirement age is mainly influenced by personal circumstances, including residence and health status. In some states like California or Hawaii where the cost of living is higher, you may have to postpone early retirement if you want to save enough to continue living in these states.

College graduates mostly retire at the average age without a problem, because they get higher-paying jobs than those without a degree. However, their retirement is also highly dependent on planning and their living standard before retirement.  As someone who seeks to put out the best early retirement blog content to help people achieve their goals, it’s time to put some facts out there that will help people understand just how retirement works.

Look at it this way, assume you and your neighbor get the same annual salary, but you save and invest a good chunk of yours whereas your neighbor spends theirs. In the long run, you may retire earlier, but your neighbor will have to keep working to sustain themselves.

We are going to discuss the different facets of retirement in this article. You will find everything you need to know about retirement age and much more below.

Social Security Retirement

Did you know you can start getting your Social Security benefits at the age of 62? That’s right. However, you should also know that if you begin collecting benefits at this tender age, you should expect reduced monthly checks.

Social Security Retirement

To get full benefits, you are required to claim your benefits at full retirement age. Your full retirement age varies according to your year of birth.

Full Retirement

Full retirement age for social security or ‘normal retirement age’ is the age that you can collect full retirement benefits once you have stopped working.

In the US, you get full social security benefits at 67 if you were born in 1960 and after, at 66 if you were born between 1943-1954, 66 and 2, 4, 6, 8, or 10 months if you were born between 1955-1959. Therefore, the full retirement age 1954 is 66, whereas the full retirement age 1955 is 66 and 2 months. You should add two months in your calculations after the full retirement age 1955 onwards, depending on your year of birth. Consequently, the retirement savings by age chart come in handy in helping you determine what you ought to save every month.

If you want to get an annual increment of 8%, claim your benefits after attaining full retirement age. Note that you can get maximum benefit at the age of 70, not beyond.

Full retirement age (FRA) is also taken into consideration in pension plans. In most cases, civil servants, members of the military, and police officers get their benefits after serving for a specified number of years, not at a certain age.

what is full retirement

Around the world, the full retirement age falls between 65 and 67 years of age. However, this age may vary depending on sex. For example, the full retirement age in USA 2020, if you were turning 62 that same year, is 66 years and eight months.

Early Retirement

For some people, early retirement age implies leaving the workforce at 55 years. However, most people don’t take this path due to deductions of benefits or ineffective planning. It’s always advisable to take early retirement if you have good contingency plans or will still receive full benefits and a pension.

Your Social Security clearly stipulates what you should expect at age 62, 67, and 70. If you decide to enjoy an early retirement age, the projected amounts are prone to change. The reason for that change is the retirement amount relies on the 35 years you earned most.

If you take your benefits early, spousal benefits may also reduce. To be specific, your spousal benefits will be reduced to 35% of your FRA amount, whereas it gets to 50% at 66 and above.

Early Retirement

In addition, Medicare benefits begin once you turn 65. If you settle for early retirement, you may need to find other health insurance options or find out if your former insurance plan can consider you a retiree and retain you with actively employed clients.

If your savings are more than sufficient, early retirement is easily achievable. Take it and spend the rest of your life living wholesomely and ticking items off your bucket list.

Retirement Age Calculator

You can find out your full retirement age in USA using the retirement age calculator. It will tell you when you become eligible to retire and collect unreduced Social Security benefits.

In a nutshell, your year of birth determines when you attain full retirement age.  The below link is to a government website that can help you identify when you can retire and what your benefits could be.

Social Security Retirement Age Chart

If you file your own tax returns, you know just how complicated government policies and their respective calculations can be. For example, the full retirement age 1954 is 66, as the full social security retirement age chart indicates. But did you know there are approximately 2,700 exceptions, contingencies, and rules that affect that FRA?

This chart credit belongs to the Motley Fool.

social security age chart for retirement

If you are unwilling to through all the tedious calculations involved with FRA, use the Social Security age chart provided on the SSA official website.

Medicare Retirement Age

Most people associate the Medicare program with retirees. However, it covers more than just those that have been in the workforce until retirement. In fact, more than 80% of Medicare beneficiaries are 65 years of age or older, but the program also serves younger people with a qualifying disability.

Medicare, like Social Security, gets funded from employee paychecks through tax withholding. You become eligible for Medicare services once you reach 65 or fit other criteria. Use Medicare’s eligibility and premium calculator to see if you are eligible for benefits.

Retirement Age by State

Although 67 and above is generally considered the ideal retirement age for Social Security reasons, in most states, except the District of Columbia, the average retirement age is below 67. According to Money Talks News, most US retirees leave the workforce at age 64.

usa retirement age by state

Retirement Age in Florida

In Florida, the annual cost of a comfortable retirement is $56,382. That brings the total amount of retirement savings you need to live in this state to $902,116. The average retirement age in Florida, like California, is 64.

florida retirement

Retirement Age in California

The average retirement age in California is 64. However, before retiring, consider that you need about $1,332,457 to retire in this state, because it will cost you approximately $83,279 yearly to retire here comfortably.

retiring in california

Retirement Savings by Age

The only way you can be guaranteed peace of mind is if your retirement saving progress steadily over time. That is why it is essential to start saving for retirement as early as possible.

In this modern-day, you can track your retirement savings progress using various apps available in the market. However, despite the easy availability of such essential tools, most people still put off planning for retirement significantly earlier in their careers.

Retirement may seem far in the future for a 35-year-old, for example. And, with all the different priorities bombarding workers, most of young folk do not like facing the idea of retirement. However, ensure you keep an eye on the progress of your retirement savings without letting age be a hindrance.

Retirement Savings by Age Chart

Many financial firms now publish retirement savings age charts and benchmarks. These show you your ideal savings level according to age and income. Note that they are not supposed to replace your comprehensive planning completely, but facilitate it.

To ensure your savings chart works, ensure it is realistic. Setting your bar too low can give you false hopes, and setting it too high can discourage you in the long run.

I found this chart at TRowePrice, and it’s a nice guide to help you figure out what you should have saved at various ages in life.

retirement savings by age

Salary Percentage

You can set your retirement savings goals by age using percentages of your salary. Experts say it is ideal for you to have accumulated savings equal to your yearly salary by 30 years of age. To achieve that, you need to save at least 15% of your gross salary starting at the age of 25. Moreover, you also have to top it all with at least 50% in stocks.

Go hard

A more aggressive retirement savings formula suggests that starting in your 20s, you should save 25% of your gross income annually. Saving a quarter of your salary may sound scary but it is possible, especially considering that the figure includes contributions from your employer, 401 withholdings, and other forms of saving.

If you use this formula, you can expect to accumulate your annual salary equivalent in savings at 30. Continuing with it will yield the following savings for you:

Getting an Early Retirement

Early retirement isn’t ideal for everybody. If you are in a good profession, living a debt-free life, and have a healthy savings portfolio, you can consider early retirement. However, if you lack these advantages, it is safer to keep working so you can be able to sustain yourself.

Here are a few advantages and disadvantages of retiring early:

Pros

Start fresh

Retiring early doesn’t mean you have shut down everything, especially regarding your career. More and more retirees are now preferring working through their retirement. Many are also trying their hands in new fields, while others stay in the same industry as consultants. Unlike regular employment, as an early retiree, you get to work out of passion rather than financial obligation. You can choose to start a new career in a different field or even further your education.

Invest in personal and personal relationships

If you are comfortable enough to consider early retirement, chances are high you worked extra hard in previous years, which may have affected your relationships. Early retirement allows you to fix this by giving you more time to spend with your loved ones.

See the world

Most people have a retirement bucket list that often includes traveling extensively. This type of travel is often distinctly different from business trips. You get to take your time, see marvelous places, and experience diverse cultures. The vacation lifestyle associated with early retirement increases your agility, stamina and improves your overall health and mental well-being.

Cons

Healthcare cost

Typically, you will not be eligible for Medicare coverage until you get to 65. If you are about to retire and you are still perfectly healthy, well and good. However, most people get health complications with advancing age. Very few employers still provide health plans after retirement today. And, if you decide to forego health insurance coverage, you risk spending a fortune when you develop complications.

Penalties

Tapping early into funds in tax-sheltered accounts can attract penalties. For example, you withdraw your 401k before 59.5 years of age, expect to incur a 10% early withdrawal penalty. However, if you exit the workforce at 55 years or older, you get exempted from this penalty.

Less benefits

If you collect your Social Security benefits before the stipulated full retirement age, expect to receive as much as 30% less. However, if you continue working past the FRA, your monthly benefits increase by 8%.

Why Should You Plan for Your Retirement?

Retirement planning is essential for anyone that wants to retire without facing financial hiccups. Keeping in mind the retirement age in USA 2020, in 2021, the highest amount an individual who claims Social Security benefits can get every month is $3,895 if they are 70 years. If they are 62 years old, they get $2,324 and $3,184 if they have reached FRA.

The figures we have quoted above show that retirement benefits won’t support a comfortable retirement without adequate planning. Some of the expenditures you should focus on include:

  • Food
  • Health cover costs
  • Housing
  • Kid’s college education
  • Emergency funds
  • Taxes
  • Inheritance money
  • Assets repair and maintenance costs

Key Reasons Why Retirement Planning is So Important

Facing uncertainty

The idea of retirement can be scary to anyone. You may be among these people. What you need to take into careful consideration is the fact that you are only going to retire once. No rehearsals. If you fail to plan efficiently today, you are bound to face many challenges.

Retirement planning helps you answer questions like: ‘what accounts can I use to save more?’ ‘Should I consider a Gold IRA Rollover?’, etc. These are the things that can help you deal with uncertainties later.

Free yourself from stress

Instead of worrying yourself sick over how your retirement will play out, how about having an actual plan covering the most critical facets of this life stage? Without retirement planning, you may fall in the same category with 70% of American adults that risk their general well being worrying about money.

Save on taxes

Taxes can eat through your taxes if you are not careful. That is why you need to prepare for retirement early enough. Your retirement tax strategy should begin early while you are still in the workforce. That is the best way to ensure you are not dishing out everything to Uncle Sam.

Make better decisions

Retirement, for most people, is a time to relax and try new experiences. You’ll definitely want to be confident that you have financial security.  Some of the decisions you will make as a retiree will have a significant impact on your finances. You shouldn’t blunder blindly into this period, without having planning how you want to spend it.

Prepare for any eventualities

Did you know half of all retirees today were forced to retire before their time was due? You also may not be given a choice. You need to factor in things like getting laid off in your retirement plan. That will put you in a much better position to cope with unexpected retirement.

Avoid being a burden to your children

You may have heard of the ‘sandwich generation.’ This term refers to people who have to support their kids as well as one or both aging or ailing parents. If you have a comprehensive retirement plan, you won’t have to worry about being a burden to your loved ones because it will cover most long-term care and medical costs.

What is My Retirement Age?

If you have been asking yourself, ‘what is my retirement age?’ and wondering whether it may change soon, we have some news for you. Whereas the retirement age currently falls anywhere from 62 to 70, things may change in the future.

Lawmakers in the US have been looking into the Social Security program, and a few changes are expected. One of those changes may affect the retirement age.

Recent projections show that by 2035 only 79% of promised benefits will be payable because Social Security is running low on funds. As proposed by Social Security experts and Washington lawmakers, one of the solutions for these problems is raising the eligibility age for claiming full benefits.

Note that these changes will leave the early eligibility age, which is 62, untouched. That means you may incur lager benefit reductions if you retire earlier than stipulated, if these changes will have taken effect. However, the changes are yet to be authorized.

what is my retirement age?

However, when determining your retirement age, consider vital factors like your current age, life expectancy, expected retirement expenses, and financial situation. If you balance these factors perfectly, along with various income options that you may have, you’ll get a rough picture of your target retirement age.

Here is a breakdown of the determiners of your ideal age of retirement:

Saved amount and interest rates

You can augment your cash flow through retirement accounts and brokerage savings. These earn you dividends and interest in the long run. And, if you need to, you can sell some of your assets for cash.

As an investor, retirement planners advise you to stay safe by sticking to the 4% rule. This rule says you need to ensure that each year you can withdraw 4% of the total value of your portfolio without draining your cash supply.

However, due to rising life expectancy and low-interest rates, you may have to revise your 4% rule to 3% and even lower. Therefore, if your savings are $1,000,000, make sure you are comfortable spending $30,000 or lower each year.

Anticipated cash flow

You need to estimate the amount of money you will need to support your lifestyle and meet your basic needs. As you are doing this, remember the fact that your income may be lower after you retire.

Moreover, it isn’t unusual for retirees to spend more on medical expenses and other activities like eating out or traveling. As such, weigh your cash flow carefully to determine when you can afford to retire and still cover your expenses and leisure activities. And, while you are doing that, remember inflation can complicate issues and make life more expensive.

Guaranteed sources of income

As a retiree, you may have various sources of income, including benefits from Social Security, annuities, and pension plan. When planning for retirement, you need to make sure your income sources can cover any anticipated costs.

In addition, some people find jobs even after retirement while for some, this is impossible. To be safer, if you are concerned you won’t be able to work after retirement, make sure your retirement plans also cover early retirement.

Health status

One of the factors that contribute to early retirement are illnesses. Most of the time, you may find yourself affected by afflictions that run in your family even if you live a healthy life. However, if you are healthy and your family history doesn’t include any severe diseases, consider yourself lucky.

If you have good reason to suspect you may develop health issues in life, factor in early retirement in your plans.

To Summarize:

Your retirement age is highly dependent on your sources of income, possible future expenses, the standard of living, and savings. Ultimately, you should let your financial status determine your retirement decision.

You can use also use the retirement age calculator discussed to help you out. Remember, retirement planning is critical. Strive to start saving and make retirement plans as early as possible to avoid problems in the future.

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